IDFC FIRST Bank's long-term debt rating reaffirmed at AA+

IDFC FIRST Bank's long-term debt instruments, amounting to ₹1,242.18 crore (reduced from ₹1,307.38 crore), have been reaffirmed at 'CARE AA+ / Stable' by CARE Ratings Limited. This reaffirmation is attributed to improvements in the bank's operational scale, diversified advances, and granularisation of deposits. The bank's liability profile is strengthening due to retail-led deposit growth, and its capital adequacy ratio (CAR) stood at 14.86% as of June 30, 2025, exceeding regulatory requirements.

The rating also considers the bank's equity infusions of ₹3,000 crore in FY24, ₹3,200 crore in FY25, and ₹7,500 crore through preferential issue in Q2FY26 to support asset growth. Profitability is moderately offset by high operating costs, with the cost-to-income ratio at 71.82% for FY25, though it showed a marginal improvement from 72.2% in FY24. Profit after taxation (PAT) for FY25 was ₹1,525 crore, down from ₹2,957 crore in FY24.

The bank’s asset quality remains a monitorable, with gross non-performing assets (GNPA) increasing marginally to 1.97% in Q1FY26 from 1.87% on March 31, 2025. The microfinance segment continues to experience stress, leading to higher provisioning requirements. However, the bank expects profitability to improve in H2FY26 due to reduced credit costs and deposit costs.